WASHINGTON -- In a broadly disappointing economic report, U.S. employers added a smaller-than-expected 96,000 jobs in August as manufacturers cut back their payrolls and government continued to shed workers. Moreover, the Labor Department revised lower the job-growth numbers estimated for July and June.
The Labor Department said the jobless rate dropped over the month, to 8.1 percent from 8.3 percent in July, but that came as many people dropped out of the labor market. In a nation where the population is growing, a shrinking labor force suggests that many workers are giving up job searches because they are striking out in the employment market or don't see good prospects.
The share of workers and unemployed people who are seeking work out of the total population-or the labor force participation rate-dropped to a 30-year low of 63.5 percent in August. Average hourly earnings also dipped over the month, the Labor Department said.
The report, coming on the morning after President Obama's nomination acceptance speech, was bad news for Obama and his supporters, who spent a considerable amount of energy during this week's Democratic National Convention defending the president's economic record and pushing back against Republican challenger Mitt Romney's criticisms that the administration's economic policies have failed.
The report also deflated hopes that had risen in recent days that the economy was recapturing momentum that was lost in the spring. Many analysts were expecting job growth of 125,000 in August, and some were looking for stronger numbers in the wake of a private survey that suggested private-sector job growth of about 200,000.
The Labor Department on Friday revised downward job growth in July, to 141,000 from 163,000 initially estimated, and it said employers added 45,000 jobs in June, not 64,000 as previously reported.
Taking the last three months together, the economy added an average of 94,000 jobs a month. That's not enough to absorb new workers entering the labor force and is down from an average of 226,000 in the first quarter of this year.
The details in the August report were not particularly encouraging either.
Manufacturing, which had been the star of the economic recovery, lost 15,000 jobs in August, confirming recent indications of slowing orders and exports. Employment in the temporary-help sector, often considered a harbinger of broader hiring activity, dropped by 4,900.
Of the job gains, 28,000, or 30 percent of the 96,000 net new positions, were in food and drinking establishments, which typically pay lower wages and offers fewer hours for people. Among better-paying businesses, computer system design firms added 11,000 to their payrolls over the month, and management and technical consulting employment grew by 9,000. Healthcare employment, which has a mix of high- and low-paying jobs, rose by 17,000 jobs.
If there is a silver lining in the report, it's that the Federal Reserve is now seen as even more likely to announce a new round of bond-buying economic stimulus when the central bank meets next week.